BORR - Seadrill To Acquire Former Subsidiary Aquadrill - Good Strategic Move At A Reasonable Price
Summary
- Company to acquire the remains of its former Seadrill Partners subsidiary in an all-stock deal valued at close to $1 billion.
- Transaction will add important exposure to the U.S. Gulf of Mexico and significantly improve Seadrill's earnings and cash flow generation potential.
- Addition of debt-free Aquadrill should move Seadrill into a net cash position.
- With the majority of the legacy Seadrill rigs committed to long-term contracts at painfully low rates, the combined company's near-term earnings potential is likely to remain limited.
- While it might take another couple of years for the company's full earnings and cash flow generation potential to unfold, investors should consider taking advantage of Seadrill's very low fundamental valuation by scaling into the shares on pullbacks.
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Seadrill To Acquire Former Subsidiary Aquadrill - Good Strategic Move At A Reasonable Price